Assess how these political risks could affect your company. and Although there was a marked improvement in reported sales from around -30% relative to what they would have been in the absence of Covid in 2020 Q2, respondents to the October DMP survey estimated that sales were still 17% lower than they otherwise would have been in 2020 Prime Ministers room for manoeuvre declines over time like the space around a flooding island. In the medium and long term, governments will need to assess ways in which they can make the healthcare system more resilient to reduce the impact of future adverse public health events. Government planning must be agile to accommodate those shifts in a structured and intentional manner. Thus, the focus must increasingly be on decarbonising production and everyday living in the UK. Passionate about generating insights to help executives make better-informed decisions. Several factorsincluding the strength of the social systems and economy going into the crisis, economic diversity, culture, political system, and citizens opinion of Data reflects general population and a 27-market average. It is important to place living with this pandemic in the context of climate change. WebPolitical factors. By clicking the "Subscribe" button, you are agreeing to the The domestic reverse charge for the construction sector to counter organised VAT fraud is another of those measures which seem to have been talked about for a while and keep getting deferred. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. The UK does not currently have a carbon tax but has been a member of the EUs Emissions Trading Scheme (ETS), which through control of the supply of carbon credits creates a market price for the right to emit. Although many businesses have already changed practices and taken some roles directly on to payroll, we still expect to see some businesses struggle with compliance where roles continue to be sourced through intermediary working. The question of whether artificial intelligence (AI) systems can own and transfer patent rights under UK law is to be considered by the UK Supreme Court. WebA brief outline follows illustrating the factors that are likely to hinder economic recovery from COVID-19. Six macro factors that will reshape business this decade The pandemic coincided with and catalyzed societal shifts, spurring a strategy reset for many industries. Join your peers for the unveiling of the latest insights at Gartner conferences. Also, note that any slight increase in VAT will warrant that consumers pay more for the goods and services this tax is charged on. Growth prospects in key markets could suffer even as companies financial and tax burdens may rise. Geopolitical dynamics in the Indo-Pacific. Ultimately, these savings will underpin a period of growth. Decisions around the way you allocate resources and invest in growth. Although trust in government has fallen since the pandemic began, people recognise the need for government to help solve fundamental problems. The geopolitics of COVID-19 will shape many political risks around the world, including emerging market debt and new industrial policies. All firm must follow the law and rules because several aspects on government policy given a lot of impact to an industry. UK legislation has been updated to continue to require UK intermediaries and taxpayers to follow Hallmark D of DAC 6, but not the remaining hallmarks. While the specific geostrategy considerations differ for each, there are five overarching actions leaders should take to manage political risk in the year ahead: Include political risks as part of your companys risk register or other risk identification processes and then dynamically monitor them throughout the year. February 17, 2021. In addition, climate change can instigate innovation, inspire new products and services that are genuinely less carbon-intensive or which enable carbon reduction by others. Listen to, and collaborate with, key stakeholders. Source: Office for National Statistics Business Insights and Conditions Survey. Senior Advisor, Geostrategic Business Group. In addition, border management policies continue to shift based on new data on the virus and vaccines. 8 a.m. 7 p.m. Forward-thinking countries are targeting such sustainable programmes that will help achieve the Paris Agreements net-zero targets while providing growth and future jobs. They also plan on making a digital society where every user will feel safe and protected in terms of their information. Pandemics are inherently geopolitical, involving issues such as national security, global leadership, and international cooperation and competition. The survey receives around 3,000 responses a month. The UK will be a major beneficiary as it is the worlds second largest exporter of services. A situational analysis must include country-specific qualitative and quantitative data, as well as global data. Since they will be paying higher prices, it will surely limit their purchasing power, causing inflation that will, in turn, affect business costs. How to manage geopolitical risk in financial services technology contracts, Fresh proposals for UK data protection reform expected on 9 March, Works created by AI image generators pose copyright risks, Tesla makes car security cameras settings more privacy-friendly after Dutch watchdog probe, Implementing the FCA Consumer Duty consumer support outcome, International Labour Organisation study reports increased global slavery figures, Firms must be FCAs eyes and ears in fight against financial crime, UK Supreme Court to consider AI inventorship in DABUS patent dispute, See our Cookie Policy for more information. To combat the tricky combination of an economic slowdown and the talent market squeeze, the best leaders will enact creative methods to acquire new skills and capabilities without hiring new full-time employees. From large retailers to small neighborhood businesses, the frustration is genuine as they struggle with the long-term reality. In the midst of the pandemic, HMRC published a surprise change in practice in relation to VAT and contract terminations in its Revenue & Customs Brief 12 (2020), which it claimed would have retrospective effect and would potentially affect all compensation payments in relation to contracts. The main political factors affecting Vodafone include EU Roaming Regulation that aims to decrease charges for mobile phone usages abroad by 70% (Preissl et al, 2009) and increasing level of consumer rights within Europe, and decisions made by European Union Regulatory Framework for the communications sector. HMRC is likely to continue to deploy significant resources to audit and investigate non-compliance with furlough and the other government coronavirus support schemes. We address the challenges facing society and the economy, from shedding light on the refugee crisis, to character education in schools, through to developing leaders in the NHS. WebSocial factors. Firms in the UK economy that export more goods and services to the EU, import more materials from the The political and legal environment in a region is based on government, public opinion, and consumer advocacy groups. HMRCs tax under consideration for large businesses has risen by 16% to 34.8bn in the year to 31 March 2020, from 29.9bn the The TCA also affirms the UKs commitment to maintaining a system of carbon pricing but is silent on methodology. EY | Assurance | Consulting | Strategy and Transactions | Tax. The uncertainty associated with such a dynamic policy environment across virtually all countries around the world simultaneously will challenge companies strategy development and execution. 2023Gartner, Inc. and/or its affiliates. Currently, Brexit is being politicised by France to underpin a national rather than international agenda and the likelihood is that the new German government will adopt a similar approach. He covers business and technology trends and their implications for business strategy, innovation, business models, leadership and executive relationships. Please visit our Cookie Policy for more information. Governments must now urgently identify the combination of regulations, policies, organisational structures and skills required to create transparency and restore trust. The EU and UK ETSs also cover only 30-40% of those who actually emit and the 1bn the UK generates from auctions is relatively modest. Uncertainty continues in the UK business markets and investors due to the UK leaving the EU. HMRC raid activity has, naturally, been hampered by the lockdown restrictions so we expect to see an uptick in raid activity as and when such restrictions are lifted. The pandemic-delayed changes to the so-called IR35 off-payroll working rules will come into force on 6 April 2021. 3. This serves as a warning for Heads of Tax to be sure of their facts before making any submissions to HMRC because if the facts are later found to differ from those presented, HMRC will want to know whether that was purely accidental, careless or knowing. So, to respect its obligation not to lessen any legislation which implements OECD rules, as a quick fix the UK has decided to continue to require Hallmark D reporting for now. Geostrategic priorities to manage these risks. Temporary closures in more than 180 countries at some point during the pandemic compounded the problem, keeping an estimated 1.6bn students out of schools. COVID-19 has highlighted hurdles in almost every element of the healthcare value chain, including supply chains, preventative medicine, primary care and in-patient treatment facilities. In 2021, shortly after the death anniversary of George Floyd, Vodafone UK was quick to become even more sensitive to Black people and other ethnic minorities working for the company. The government has extended this power to depart from CJEU decisions to the Court of Appeal and its equivalents. Geopolitical analyst and strategist. Press reports suggest that the UK may be proceeding with the carbon emissions tax on which it consulted in the summer. It is intriguing to reflect on text written at the end of 2020 that speculated on key trends and patterns for the UK economy for 2021. Digital. 5 minute read During 2022, the EU will have to adjust to Germanys new three-way coalition and to the continuing fallout from the on-going 2022 French presidential election. HMRC launched the Profit Diversion Compliance Facility (PDCF) in January 2019 and, after a short break as a result of the pandemic, has now resumed sending nudge letters to businesses, prompting them to reconsider their TP, residence and profit attribution arrangements and offering them the opportunity to disclose all irregularities under the PDCF and pay any tax owing, in order to avoid an HMRC investigation and a possible exposure to diverted profits tax. Taxes designed to discourage activity should, if perfectly successful, lead to no increased tax take but given how long it will take to turn the carbon super-tanker around, a carbon tax might only to be around for the amount of time it will take to pay off coronavirus debts. Thinking ahead to 2022, they want a better future, informed by the lessons of 2020 and now 2021. Inequality is both a cause and an effect of the six challenges described above. Privacy Policy. Indeed, health and safety in the workplace are very crucial as This would include, but not limited to, enforcement of new tax laws, tough employment regulations, escalating threats due to terrorism, and competitive rules in the different countries. To accept all cookies click 'Accept all'. Once detached executives are starting to peer down through delegation layers and into the details to find out-of-date technologies, bureaucratized practices and process inefficiencies. The pandemic was a catalyst to a number of other macro factors to come to the foreground, like systemic mistrust and poor economic productivity. In 2019 exports accounted for 47% of GDP Sweden is the eighth largest economy in the EU with a GDP of 500bn. Partnerships. Adaptive AI, the metaverse, platform engineering, sustainable technology and superapps will change how organizations and societies operate. The insights and services we provide help to create long-term value for clients, people and society, and to build trust in the capital markets.